WGU C213 Accounting for Decision Makers exam and answers

Which two items increase net income? (Choose 2)

– Cost of sales

– Income tax expense

– Gain on sale of assets

– Interest income

When should the airline recognize revenue?

– Only in November

– In October and November

– In September, October, and November

– Only in September

What amount of sales commission is recognized at year-end?

– $50,000

– $10,000

– $30,000

– $20,000

Impact of purchasing goods on credit for supplies?

– Increase in assets and increase in liabilities

– Increase in assets and decrease in liabilities

– Decrease in assets and decrease in liabilities

– Decrease in assets and increase in liabilities

Best indicator of a firm’s viability as an ongoing concern?

– Cash from financing activities

– Cash from operating activities

– Cash from investing activities

– Cash from production activities

Which item is an operating activity under U.S. GAAP?

– Cash receipts for sale of plant assets

– Cash receipts from sale of a business segment

– Cash payments for administration expenses

– Cash payments for purchase of plant assets

Advantage of the indirect method of cash flow statement?

– Easy for a novice to decipher operating cash flow

– Easy to reconcile between net income and cash flows

– Easy to avoid mistakes because method reveals indirect costs

– Easy to highlight difference between direct and indirect costs

Why do companies with large physical assets report net income less than operating cash flow?

– Purchase of physical assets expense

– Dividend payment expense

– Interest payment expense

– Depreciation expense

Which two examples represent financial statement errors? (Choose 2)

– Unintentionally recording prepaid revenue as earned

– Overpaying a supplier and receiving kickback

– Miscalculating payroll tax at year-end

– Auditor disagrees with allowance estimate

Which internal control prevents paying for items not received?

– Two signatures on checks

– Prenumbered checks

– Receiving department forwards receiving record to AP

– Purchasing department authorizes orders

Technique describing incurring debt but paying it over time?

– Accounting management

– Income smoothing

– Liability deferral

– Profit control

Who does Sarbanes-Oxley apply to?

– Nonpublic US companies

– Publicly traded subsidiaries of foreign companies in US

– Publicly traded US companies

– Nonpublic foreign subsidiaries

SOX requirement for accounting firms auditing public companies?

– Cannot provide certain nonaudit services

– Cannot audit over five years

– Cannot be retained by CFO only

– Cannot advertise

Which two procedures do external auditors use? (Choose 2)

– Obtain third-party confirmations

– Perform marketing analysis

– Conduct customer satisfaction survey

– Examine records for balances and transactions

Significant role of the SEC in financial reporting?

– Ensure reliable info for decision-making

– Train controllers

– Support management

– Ensure auditors have resources

Which ratio evaluates efficiency of working capital?

– Ultra

– Current ratio

– Quick ratio

– Inventory turnover ratio

What does management accounting present?

– Qualifications of managers

– Data for internal decision-making

– Overall economic performance for shareholders

– Detailed performance for outside stakeholders

How does management accounting differ from financial accounting?

– Used for internal planning and control

– Restricted to financial data only

– Presents unbiased view

– Not used for competitive advantage

Which costs are found in manufacturing rather than service companies?

– Direct labor

– Indirect labor

– Selling costs

– Raw materials

Costs associated with two or more business units are called?

– Product costs

– Direct costs

– Variable costs

– Indirect costs

Cost incurred as part of the production process?

– Opportunity cost

– Raw materials cost

– Sunk cost

– Period cost

Two examples of product costs? (Choose 2)

– Period expenses

– Raw materials

– Direct labor

– Selling and admin expenses

Role of ethical standards in management accounting?

– Work only with ethical companies

– Guide resolution of ethical dilemmas

– Prevent all unethical behavior

– Predict ethical behavior

Action to take when confronted with ethical conflict?

– Confer with any stakeholder

– Report directly to CEO

– Consult with coworker

– Use an objective advisor confidentially

First step in calculating product cost using ABC?

– Calculate G&A

– Double-check DM & DL

– Identify overhead activities

– Assign overhead costs

Two costs used to calculate inventory overhead? (Choose 2)

– Factory electricity

– Admin office electricity

– Production employee benefits

– Admin employee benefits

How is ABC different from traditional costing?

– ABC used with homogeneous products

– ABC based on single driver

– ABC requires less time

– ABC provides more precise overhead assignment

Which overhead cost is batch-level?

– Property taxes

– Product engineering wages

– Factory insurance

– Machine setups

Appropriate cost driver for a call center?

– Total sales dollars

– Number of customer contacts

– Labor hours

– Total material cost

Which concept states entity is separate from owner?

– Monetary unit assumption

– Periodicity assumption

– Entity concept

– Going concern assumption

Order of current assets on balance sheet?

– Operating efficiency

– Profitability

– Solvency

– Decreasing liquidity

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